MLB lockout: Why the league’s proposed minimum wage hike isn’t as historic as it seems

For the first time in 27 years, Major League Baseball will lose games due to a work stoppage in 2022. Commissioner Rob Manfred announced Tuesday that the first two regular season series have been canceled after MLB and the MLBPA were unable to reach an agreement and reach a new collective agreement. So far, 90 games have been lost due to the owners’ lockout.

“The game has been damaged for quite some time now,” MLBPA executive director Tony Clark said Tuesday. “The game has changed. The game has been manipulated. Players have been trivialized in a way that’s really hard to explain in the grand scheme.”

MLB and MLBPA remain far apart on several fundamental economic issues, including the Competitive Balance Tax (aka Luxury Tax). The two sides closed the gap on the minimum wage before the owners’ informal deadline on Tuesday, although a gap still exists. Here is the most recent minimum wage proposal from each side:

*Last collective agreements have included minimum wage increases based on CPI calculations over the past two years, so this is not unusual.

The minimum wage was $570,500 in 2021. Just two weeks ago, MLB was proposing a minimum wage of $630,000 in 2022 while the MLBPA was seeking $775,000. Each side approached the other through several proposals.

MLB and MLBPA will resume negotiations on Sunday, and when they do, finding common ground on the minimum wage will again be a crucial step toward an agreement. Here’s what you need to know about MLB’s minimum wage, each side’s offer and why it’s such an important issue for the union.

MLB’s minimum wage lags behind other leagues

Of the big four North American sports, MLB has by far the longest season (they play twice as many regular season games as the next longest) but also the lowest minimum wage. Here is each league’s minimum wage for its most recent season:

• NBA: $925,258
• NHL: $750,000
• NFL: $660,000
• MLB: $570,500

With all due respect to the NHL, its annual revenue is just under half that of MLB these days (the NHL is projecting about $5 billion in revenue for the 2021-22 season), but their players enjoy a minimum wage of more than 30%. taller than their fellow baseball players. This right is reason enough for the MLBPA to demand a significantly higher minimum wage.

It’s not just that MLB has the lowest minimum wage among the four major North American sports. It’s that the majority of baseball’s player pool earns something close to that league minimum. Let’s expand on that now…

Most MLB Players Aren’t Millionaires

Work stoppage debates in sports often turn into “millionaires versus billionaires” and yes, baseball players are very well paid compared to the general population. However, they are not all millionaires. Not even close, really. The Associated Press reports that 62% of players on the 2021 Opening Day rosters had salaries under $1 million and 32% had salaries under $600,000. A third of the league have done something close to the minimum in 2021.

The average MLB salary was $4.17 million in 2021, though averages can be misleading. $4.17 million is the average of $4.07 million and $4.27 million. It’s also the average of two players making $600,000 and one player making $11.3 million, and it’s a better representation of modern MLB roster construction. The vast majority of players earn close to the minimum, and only a handful manage to stick around long enough to really cash in and qualify as millionaires.

In 2019, the last non-COVID season, nearly two-thirds of players who entered the field had less than three years of service, according to The Score’s Travis Sawchik. With the exception of the few players who qualify as Super Twos each year, players with less than three years of service have no arbitration rights and earn close to the minimum. Only just over a third of the league is significantly above minimum wage. From Sawchik:

Among all players to enter the field in 2019, 63.2% had less than three years of service time. They accounted for 53.6% of accumulated service time days, but together only accounted for 9.8% of player compensation.

At the opener of the 2021-22 NHL season, 23% of players were paid less than 10% of the league’s lowest salary. In the NBA, it was only 3%.

Sawchik also found that the average career in MLB is about 3.71 years of service time these days, down from 4.79 years in 2005. Teams haven’t been so subtly lured into building their rosters around players early in their careers, as they are significantly cheaper than veterans. , first and foremost, and also because they tend to be in their twenties and not yet approaching their declining years, so you get peak performance. Players with less than three years of service are the most sought after demographic by clubs.

A look at each proposal

Depending on the view, MLB’s latest offer is either a historically large increase in the minimum wage or one more or less in line with the latest labor agreements. Here are the minimum wage increases in year 1 of the last 10 CLAs:

The minimum wage really exploded during this period from 1980 to 2003. The average increase in the first year of each new CBA during this period was no less than 37.6% and often increased by around 50%. However, in recent CBAs, the increase has been less than 20% and only 5.4% in 2017. In real dollar terms, the increase in 2017 was lower than in 1990.

Now here are the numbers on the latest MLB and MLBPA minimum wage proposals:

In real dollar terms, MLB’s proposed minimum wage increase would be the largest on record and a substantial increase over the last labor agreements. The MLBPA’s proposed minimum wage increase includes an even larger increase, greater than the initial increase for the last three CBAs combined ($146,500). Either way, the real increase in the dollar is huge.

But in terms of percentage increase, both offerings are more in line with the 2007 and 2012 CBAs than the formative 1980-2003 CBAs. MLB and MLBPA are only offering the sixth-largest percentage increase of the last nine CBAs. So yes, in real dollar terms, players would get a historic raise. In terms of percentage increase, it’s only marginally better than the most recent CBAs.

In addition, the annual increase in the minimum wage within each proposal is very different. MLB is seeking a $10,000 per year raise for a $40,000 raise over the entire five-year deal, or 5.7% of the base minimum wage in 2022. MLB revenue increased on average 8% per year since 2002. The MLBPA is asking for a $40,000 raise in the first two years alone.

Given the deals already on the table, the union is on course to land its biggest minimum wage increase in some time based on percentage increase, although not entirely out of step with the recent collective agreements. Also, the amount of money we’re talking about is small grains for a major league operation. A league minimum 26-player roster would have cost $14.83 million in 2021. Under MLBPA’s proposal, it would be $18.85 million in 2022. The difference of $4.02 million equals a rounding error for MLB franchises.

With about two-thirds of the league falling into the pre-offer duty time level, the MLBPA has understandably focused on putting more money in those players’ pockets. It would help almost two-thirds of players in the league right now and all player who comes from the minors for the life of the ABC. Simply put, a higher minimum wage is the best and easiest way for the MLBPA to enrich the majority of players entering the field.